The energy transition is accelerating, but we are far from finished
DNV’s latest analysis confirms that the world is on its way towards a greener energy future, but the transition is still unfolding too slowly to meet global climate targets. Solar, wind and broader electrification are pushing developments forward, while grid constraints and slow-moving sectors such as heavy transport and energy-intensive industry continue to hold back progress. So, what will it actually take to succeed?
Electrification and renewable energy
Despite these challenges, there are also clear bright spots. Electrification and the expansion of renewable energy are progressing as an unstoppable force. Solar and wind, supported by ever more affordable and efficient battery technology, are accelerating the transition at record speed. By 2040, solar and wind are expected to provide more than half of global power generation, and solar alone could deliver up to 47% by 2060. The electric vehicle market is evolving in the same direction: The global electric car fleet passed 50 million in 2024, and by 2032, every second new passenger car sold is expected to be electric.
The power grid is the bottleneck
However, one factor in particular threatens to slow this development: the electricity grid. Grid expansion is not keeping pace, and this is significantly constraining the ability to realize the full potential of renewable energy. Without today’s grid congestion in Europe, solar capacity could be 16% higher and wind capacity 8% higher by 2035. This clearly illustrates how essential it is to invest in grid infrastructure in parallel with increasing production.
New factors shaping the energy landscape
The report also points to new forces driving energy demand. Artificial intelligence (AI) and data centers will increase electricity consumption, but are still only expected to account for around 3% of global power use in 2040. At the same time, a stronger emphasis on energy security is providing a lasting boost to non-fossil power sources. Nuclear power is clearly returning to the energy mix, with projected growth of 150% by 2060. Small modular reactors (SMRs) are expected to play a leading role after 2030, although cost parity with large-scale reactors is unlikely before the 2040s.
Sectors that are lagging behind
Not all sectors are following the positive trend. Heavy transport and high‑temperature industries are decarbonizing slowly, and hydrogen is contributing far less than anticipated: its projected share in 2050 is now just 3.5%, well below the 15% needed to align with the Paris Agreement. Carbon capture and storage (CCS) is expected to capture around 1,600 MtCO₂ per year by mid-century, yet this remains significantly short of what is required for net zero.
The energy transition is advancing and gaining momentum in several areas, but the overall pace must increase. Accelerated grid development, higher investment in renewable energy and targeted technology innovation for the hardest‑to‑abate sectors are all critical to meeting climate goals. For businesses, this translates into both stricter regulatory demands and new avenues for value creation – from large‑scale electrification to the development, deployment and gradual phasing‑in of new energy solutions.
Read DNV`s Energy Transition Outlook Norway here (Norwegian) >
